I think you will agree that some country’s stock exchanges & brokers charge too much to access market data and trades.
A student who purchased the Liberated Stock Trader Pro training wrote to me on this topic.
“Your training program appears to be excellent, but I have no way of being able to carry out Fundamentals Stock Screening on the ASX (Australian Stock Exchange) without spending thousands of more dollars on the local exchange data feeds and news feeds. What can I do?”. Arne Zweig. New Zealand.
The Problems Trading in Local Stock Markets
- He lives in a country where trading the local stock market; in this case, the Australian Stock Exchange (ASX) costs $95 per trade.
- He cannot get a good high-quality stock market software platform at a reasonable price.
- International stock market software, including robust stock market screening, is prohibitively expensive for regional markets; $1000’s per year.
- There is no high quality online free stock screener he can use for this exchange.
- For the new trader, the costs are insanely high.
But there is a solution.
The Benefits When Trading the U.S. Stock Markets
- Brokers typically cost $1 per trade regardless of trade size because there is enormous competition. Today you can actually trade for free in the USA.
- The quality of the U.S. Stock Market Analysis Software is vastly superior due to the competition.
- The low cost of stock market analysis software leads the industry in the US because of competition.
- You can get excellent stock market analysis software like TradingView or many others with powerfully integrated stock screening for as little as $9 per month.
The situation when trading regional stock markets
- Cost per trade with local brokers is sky-high because of lack of competition; seriously, $95 per trade is outrageous.
- Quality of Stock Market Analysis Software can be excellent, but due to lack of scale, the cost is also higher.
- Many country exchanges charge a premium for their data feeds, which add to the overall trading cost.
One solution is not to trade your local stock market but to directly trade on the U.S. Stock Markets, bypassing your thieving local banks, brokers, and exchanges.
You will get all these advantages:
- Low or Zero transaction costs
- High-quality, low-cost software
- The possibility to trade in your evenings after work or mornings before work, depending on your location.
- You will get to trade in a reasonably well-regulated stock market with high volumes and good liquidity on thousands of the world’s best companies.
The Best Kept Secret in the Industry They Do Not Want You to Know.
You can do what I do. I live in Germany but trade directly on the US exchanges. I use Telechart 2000 from Worden Brothers & TradingView as my analysis software. I get the advantage of using a US Broker (TD Ameritrade or Tradestation are excellent low-cost brokers). I get to develop my strategies during the day and trade in the evening.
How can I trade directly on the US stock markets with all these advantages?
The US has a series of tax treaties with many countries. This means if you are a non-resident, meaning you live outside the USA, you can trade and profit in the US without having to pay “withholding tax” in the US.
Understand Withholding Tax
Withholding tax is a tax on your investments applied when you sell a stock. Withholding Tax is applied to all those people who do not have valid tax credentials in the US. Withholding tax is at 30%. This means that if I buy stocks for $1000 and I sell them a few days later for $1,000, I will pay $300 tax. It is like an emergency tax because you do not have a valid tax code.
Consider a Tax Code
As you are a non-resident, meaning you are a New Zealander living in New Zealand, you cannot get a tax code in the US In fact, you do not need a tax code. The US has a tax treaty with New Zealand, meaning that my student can actually be exempt from all TAX in the US and declare his profits in New Zealand and pay the tax at his local rate to the New Zealand tax authorities at the end of the year, this is called a double taxation treaty.
How great is that?
Start Trading in the US 5 Step Checklist
All you need to do as a non-resident is do the following:
- Check that your country has a Tax Treaty with the USA. IRS United States Income Tax Treaty Countries.
- If your country has a treaty – then download a W8-BEN form and complete it according to the guidelines. Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding
- Select your Broker: Firstrade is excellent because you get zero transaction costs and great software free when you are a brokerage client. See my review here.
- Submit your W8-BEN form to the broker and wait for confirmation that your W8-BEN form is accepted, and you can trade without paying withholding tax.
- When your account is open, you can do an international bank transfer to get your funds across to the US so you can start trading.
Tip: Be careful your W8-BEN will expire on the last day of the third succeeding year. So you will need to fill out another one and send it to your broker to regain your US Tax-free status.
I have been trading the US markets for almost 20 years, and I have to say it is excellent. The news content provided by companies like Benzinga is world-class and ahead of other countries. The US has many of the most significant technology companies globally, like Google, Microsoft, Facebook, Amazon, Netflix, and many other industry leaders. The low costs and the breadth of the market mean you can select from the best of the world’s leading economies.
Enjoy your future trading in the best financial market in the world.
Note: I am not a professional tax adviser. Do your research and make sure your Tax Treaty covers this. You can ask your selected US broker for advice and confirmation you are covered.
Over to you, agree or disagree, have the same problem, leave a comment. I will gladly answer any questions.